Economist details impact of oil and gas in Northern Colorado

The industry is growing, but not without costs, says CSU's Martin Shields

By Craig Young Reporter-Herald Staff Writer

Posted:
12/05/2013 05:20:23 PM MST

Updated:
12/05/2013 05:51:21 PM MST

The McDonough No 1 oil well just south of the Marketplace at Centerra on East Eisenhower Boulevard, shown in this file photo, is one of a handful of producing wells within the city of Loveland. The oil and gas industry has been adding jobs since the recession, helping the economic recovery of Northern Colorado and the rest of the state, according to Colorado State University economist Martin Shields.
(Jenny Sparks)

LOVELAND -- Colorado's economy has replaced all the jobs lost during the recession, and the surging oil and gas industry has been "one of the shining, bright spots in the recovery," a local economist told a Loveland audience this week.

Martin Shields an economics professor and director of the Regional Economics Institute at Colorado State University, spoke Wednesday at the annual Regional Issues Summit of the Northern Colorado Legislative Alliance.

Although the industry represents just 1 percent of the state's 2.4 million nonfarm jobs, "it has been an important part of the recovery from the recession," he said.

Martin Shields

Quoting from a study his office released Wednesday, Shields said 29,170 Coloradans held jobs related to extracting, distributing and refining oil and gas last year, 655 more than the 2008 peak and 17,656 more than in 2001.

He added that many jobs in the industry are temporary contract jobs without benefits, and they aren't counted in the official statistics he was reporting.

Good-paying Jobs

Saying he is "a labor guy" concerned with "the plight of folks without a higher education," Shields said oil and gas work runs counter to the traditional relationship of higher educational achievement with higher pay.

"The thing about the industry is that it does provide high pay to folks without requiring a college degree," he said, citing median pay of $20 to $30 an hour.

That aspect of oil and gas employment provides opportunities to the 60 percent of adults in Larimer County who don't have a college degree, he said, and the 68 percent nationwide.

The Wattenberg Field between Denver and Greeley has been responsible for much of the growth in oil production since the early 2000s, Shields' report shows.

Of the 3,775 drilling permits approved in Colorado last year, almost half were in Weld County, which has 20,186 active wells, the report says. The county with the next highest number of wells is Garfield, with 10,282.

Fracking

Shields said the increased use of horizontal drilling and hydraulic fracturing have made the growth in oil and gas production possible.

"With this new technology, Colorado's oil production became more competitive on an international basis," he said.

The report says oil and gas produced in the state was valued at $9.2 billion in 2010, up 26 percent from the previous year but well short of the $14 billion in 2008, when natural gas prices were high.

He acknowledged that the industry "is not fully innocuous."

The oil and gas business is volatile and susceptible to global energy prices, the jobs often require workers to move from county to county or state to state, the equipment is hard on local roads, the processes require large amounts of water and "it's disruptive to the environment."

He said residents' concerns about the potential air, water, noise and light pollution of oil and gas extraction have led to recent restrictions on hydraulic fracturing in several Front Range cities, including Fort Collins and Longmont.